An SEC settlement with a twist: This time Monsanto’s executives pony up too

WHEN Monsanto agreed to pay regulators US$ 80 million ( RM344 million) last Tuesday for accounting missteps, the giant agribusiness’s chief executive also chipped in: He voluntarily agreed to return his bonus for the years the fraud occurred.

Hugh Grant, who has served as Monsanto’s CEO for more than a decade, will return US$ 3,165,852 in cash bonuses and stock awards to the company. Carl Casale, the company’s former chief financial officer, will give back US$ 728,843.

It is the first time in memory that senior executives voluntarily agreed to return their bonuses in such a case.

Neither was accused of wrong- doing by the Securities and Exchange Commission, making the voluntary relinquishment of their bonuses even more unusual.

Monsanto was accused of booking millions of revenue after launching a rebate programme for one of its popular herbicide products, Roundup, but not properly accounting for the cost of the promotion. By 2009, according to the SEC, Monsanto’s Roundup was losing ground to cheaper competitors.

It began to offer retailers or distributors rebates in order to encourage them to carry the herbicide despite its higher prices. The programme helped boost sales, but when reporting its profits to shareholders, Monsanto did not reflect the cost of the effort, the SEC says.

“As a result of the improper accounting, Monsanto met consensus earnings-per- share analyst estimates for fiscal year 2009,” according to the SEC filing on the case.

“This type of conduct . . . is the latest page from a wellworn playbook of accounting misstatements,” SEC Chair Mary Jo White said in a statement.

Monsanto did not admit wrongdoing.

“The company is pleased to put this matter behind it and remains focused on building value for its shareowners,” the company said in a statement.

Grant and Casale were not totally selfless by agreeing to return their bonuses.

Under Sarbanes Oxley, the accounting rules adopted in 2002 in the wake of Enron and Worldcom, the SEC could have gone after that money anyway, though it is less likely to do so when the executive has not been accused of wrongdoing.

And Grant, 57, should be able to recoup his losses quickly. Monsanto increased his base pay 6.5 per cent last year to US$ 1.6 million.

He also received a US$ 1.9 million bonus and is eligible for nearly US$ 10 million in “long-term incentives.” — WPBloomberg